According to the head of a major real estate franchise, the vast majority of Australian real estate investors aren’t getting the maximum benefit from their depreciation claims.
“Almost 80% of landlords fail to maximise depreciation claims against their investment property, potentially missing out on thousands of dollars come tax time,” Raine & Horne executive chairman Angus Raine said.
“The problem is that many landlords either aren't aware of the benefits associated with depreciation, or don't have an up-to-date depreciation schedule, which enables them to claim against the reduction in value of items such as carpets, curtains, stove cook tops, some light fixtures, shower heads and so on,” Raine said.
With landlord able to claim between 10% and 40% off a variety of depreciable items each year and in some case 2.5% of the building cost, Raine said investors are possibly missing out on thousands of dollars each year.
Raine’s depreciation reminded comes not long after one issued by Bradley Beer, chief executive officer of BMT Quantity Surveyor, who said investors are likely costing themselves by doing their own depreciation claims.
“Because it’s a tax issue people probably think their accountant looks after it and their other people who just make some guesses,” Beer told Your Investment Property Magazine.
“The thing we need to do is get inside the head of investors and give them a bit more education about what’s involved and how they can get the most out of it,” he said.
Beer those doing DIY depreciation claims are likely to miss out due to a poor understanding of both what can be claimed, especially when it comes to older properties, and how to pull costs apart to maximise the claimable amount.
While Beer said those who do their own depreciation claims are likely to cost themselves money, he also said they’re taking other risks as well.
“It’s definitely reducing the risk by getting an expert to claim the right things. We won’t put something on there that you can’t claim and we know the correct methodology to value things for the purpose of depreciation,” he said.
“If something does come up we’re the ones you’re going to come back to and we’re going to back it and talk to the ATO about what we’ve done and we’re confident we know the rules.”
